When people behave in ways that involve increased risk because they have insurance, this is known as
A. adverse selection.
B. moral hazard.
C. asymmetric information.
D. a HMO.
B. moral hazard.
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Adverse selection exists when
A. the parties on one side of the market, who have information not known to others, self select in a way that benefits the parties on the other side of the market. B. the parties on one side of a market charge more for something than the parties on the other side of the market want to pay. C. one party to a transaction changes his or her behavior in a way that is hidden from and costly to the other party. D. the parties on one side of the market, who have information not known to others, self select in a way that adversely affects the parties on the other side of the market. E. none of the above
Refer to Scenario 7.1. The total cost to produce 100 cookies is
A) $0.10 B) $0.25 C) $25.00 D) $100.00 E) indeterminate
Some economists criticize the Lorenz curve because it
A) includes too many things in measuring income, such as food stamps, housing aid, and other government programs. B) does not account for the effect of age on a family's income. C) measures unreported income earned in the underground economy. D) uses after-tax income when pre-tax income is more appropriate.
At $30 each, Jack will buy 1 Blu-ray and at $25, he will purchase 2 . If the price is $25, Jack's consumer surplus is: a. $5
b. $10. c. $15. d. $20.